The China-based company behind the purchases of 22 Grand Strand golf courses, several golf-related businesses and multiple other properties in the area is allegedly being investigated by authorities in China for possible fraud, according to several reports in Chinese publications and business websites. Pine Lakes Country Club is one of the Grand Strand properties Founders Group International purchased in recent years. Yiqian Funding, the parent company in China of Founders Group International, is allegedly being investigated. Jason LeeThe Sun News file photo

The China-based company behind the purchases of 22 Grand Strand golf courses, several golf-related businesses and multiple other properties in the area is allegedly being investigated by authorities in China for possible fraud, according to several reports in Chinese publications and business websites. Pine Lakes Country Club is one of the Grand Strand properties Founders Group International purchased in recent years. Yiqian Funding, the parent company in China of Founders Group International, is allegedly being investigated. Jason LeeThe Sun News file photo

Parent company of Founders Group International accused of fraud in China

The China-based company behind the purchases of 22 Grand Strand golf courses, several golf-related businesses and multiple other properties in the area is allegedly being investigated by authorities in China for possible fraud, according to several reports in Chinese publications and business websites.

The articles claim the alleged fraudulent business practices of Yiqian Funding involve U.S. golf course purchases and include a Ponzi Scheme, shell companies and internet fraud, and that at least two business offices in China have been raided and some company assets have been frozen.

The company has denied wrongdoing in a statement posted on its website, in which it urged its employees to not believe the false accusations.

Yiqian is the parent company in China of Founders Group International (FGI), which is operating its Myrtle Beach golf properties. Dan Liu is the president of Yiqian Funding and his partner in FGI, Xian “Nick” Dou, is the president of FGI.

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Both Liu and Dou, who has lived in New York for many years, now have residences in Myrtle Beach.

Founders Group International LLC is registered in South Carolina, and Dou said it won’t be impacted by any potential issues Liu’s parent company may face in China.

Founders Group is U.S. registered. There is nothing wrong with Founders Group. I’m taking care of the Founders Group.

FGI president Nick Dou

“Founders Group is U.S. registered. There is nothing wrong with Founders Group,” Dou said. “I’m taking care of the Founders Group.”

Dou insisted Founders Group’s purchases were made with funding that was properly attained. “The money is invested,” Dou said. “It has been approved by the Chinese government. Any penny that comes out of China you have to get the government’s permission.”

Dou said Liu has been in Europe this week for a meeting of Yiqian board members and executives, and said he believes that Yiqian Funding is operating normally and he questioned the authenticity of reports of authorities investigating fraud in the company and its branch offices.

“If authorities are involved in Dan’s companies in China, they would be all closed and shut down,” Dou said. “The main office in Nanjing, everything is OK. It’s running. It’s not shut down. … I don’t know that much about what’s going on in China, but as far as I know his business is OK.”

Dou also reiterated the claim in the Yiqian statement on its site that any recent visits to its businesses were routine checks and inspections on businesses of its type.

Myrtle Beach Mayor John Rhodes has courted Chinese investments through eight trips to China, including a 16-day trip with Horry County Council Chairman Mark Lazarus early this year. They visited one of Liu’s Yiqian businesses in China, as well as with prospective investors in a proposed $100 million Chinese cultural village west of the Intracoastal Waterway.

Rhodes expressed concern for both what could become of the local properties were Yiqian Funding to suffer financially, and the resulting perception of investors from China.

“I need to find out more about what’s going on,” said Rhodes, who on Wednesday was unaware of the reports on Yiqian in China. “It would be a black eye on what we’re looking at down the road and how people look at a Chinese investor and where all this money is coming from. The people I’ve been dealing with [who have committed to investing in the cultural village] are bona fide businesses.”

I need to find out more about what’s going on. It would be a black eye on what we’re looking at down the road and how people look at a Chinese investor and where all this money is coming from. The people I’ve been dealing with [who have committed to investing in the cultural village] are bona fide businesses.

Myrtle Beach Mayor John Rhodes

Articles detailing some of the accusations against Yiqian have appeared on the popular internet finance website Eastmoney.com and in the China Business Journal, the Bowen Press online news magazine, and Epoch Times, which claims on its website to be the world's biggest Chinese and multiple languages publication and internet media outlet that publishes in five continents and has offices and organizations in 35 countries.

According to an Epoch Times article on Monday, which cited reporting from other publications and websites:

[Bowen Press reports that as much as $1.5 billion U.S., or about $10 billion Chinese Yuan Renminbi, may be involved in the alleged fraud. The company is accused of defrauding investors by transferring money to a U.S. branch company that purchased golf courses, hotels, mansions and yachts and then re-sold the purchases back to Yiqian investors at inflated prices.

The China Business Journal reported that a source claims Yiqian, which does business in China under both its Mandarin name and the English name “Easy Richness,” is under suspicion of running a Ponzi Scheme, and is accused of establishing shell companies in the U.S., falsifying some company records and not having clear records to indicate how some investor money has been spent.

The Eastmoney.com report says at least one branch office in the Shaoxing area of the Zhejiang province was raided and assets were frozen, and some management employees were taken by authorities for questioning.

The Epoch Times report said the Yiqian headquarters in Nanjing was also raided and some assets were at least temporarily frozen, and added that Liu was not in China at the time of the raids.

According to Yiqian’s website, the company has more than 500 branch offices/companies in 130 cities in China and has been expanding.

The Epoch Times article says Liu founded Yiqian in 2010 and it specializes in Peer-to-Peer (P2P) lending.]

In P2P, lenders underwrite borrowers but don’t fund the loans directly. They are instead an intermediary between the lender and either individual or institutional investors such as hedge funds and investment banks, and connect the two parties online.

The third-party investors take on the loan risk, not the P2P lenders, though borrowers only interact with the P2P lender for acquisition and repayment of the loan.

Chinese authorities have been cracking down on P2P businesses, according to numerous published reports.

Yiqian’s statement on its website claims: the checkups are meant to ensure the P2P industry is operating correctly and are now common because of past problems with similar businesses, Yiqian is operating normally, the media has created rumors and false accusations, and Yiqian has always followed regulations and is a transparent company.

Reports in China have also claimed Liu has donated to Donald Trump’s presidential campaign. Though FGI property Pawleys Plantation hosted a Trump town hall event in February, Dou claims the hall was rented and neither Liu nor FGI have donated to any U.S. political campaign, and Trump campaign press secretary Hope Hicks said Friday via email that she is not aware of any donations.

“Founders Group has never, ever donated a penny to any politicians including Trump in the U.S.,” said Dou, who participated in an international investment summit in Washington, D.C., earlier this week.

FGI purchased 22 courses between September 2014 and April 2015, as well as the Prime Times golf membership program, tee time call center, two golf package companies and a few popular golf- and tourism-related websites.

FGI investors purchased 29.1 acres of Myrtle Beach oceanfront property from Grande Dunes owner LStar Communities in January for $25.6 million, according to Horry County records, and a luxury high-rise hotel is a probability for the property.

FGI or subsidiary companies also own more than 300 acres of undeveloped land at Wild Wing Plantation, TPC Myrtle Beach and International World Tour Golf Links; 200 lots at Wild Wing; the fledgling 80-resident multifamily Stonewall Villas development in Longs; and other tracts. Dou said all of the purchases are debt-free.

FGI is creating a real estate division to market and sell some of the non-course property it has acquired.

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